Despite recent talk of a recovery in Dubai’s real estate market, the UAE’s construction sector is on track to report its second consecutive year-on-year decline. Since the beginning of 2012, there have been $12.6bn-worth of contracts awarded, $2.6bn short of 2011’s full-year result.

Contractors working in the seven emirates will be hoping that after a decade of wild booms and dramatic busts, the market has finally reached its bottom after a dramatic fall from the 2008 peak of $54.9bn.

With funding woes causing clients to cancel plans for future projects, contractors have been forced to downsize their operations and wait for the market to stabilise.

Recovery hopes

There have been some signs that the market has steadied this year with a number of major contract awards.

Transport infrastructure has been the main driver of the market in 2012, both in Dubai and Abu Dhabi. The largest contract this year was awarded for the construction of the midfield terminal building at Abu Dhabi International airport. The estimated $2.9bn deal, which was secured by a contracting consortium of Turkey’s TAV, Athens-based Consolidated Contractors Company and the local Arabtec Construction, is the largest construction contract ever awarded in the UAE.

Like Abu Dhabi, Dubai continues to invest in its main international airport. In January, it appointed local contractor Alec to build the estimated $400m concourse 4. The contract follows a similar deal for the airport’s concourse 3, which was awarded to Alec in 2009.

Port infrastructure is also receiving investment, as Dubai restarts its upgrade of the region’s largest port at Jebel Ali. Port operator DP World has awarded Japan’s TOA and France’s Soletanche Bachy a $191m contract to build the estimated $400m Terminal 3.

Outside the transport sector, two contracts estimated to be worth more than $1bn have been awarded for the construction of real estate projects.

The largest went to the local/Australian Habtoor Leighton Group to build the Habtoor Palace hotel development in Dubai. The contract, valued at $515m, involves building three hotels on the site formerly occupied by the Metropolitan Hotel on Sheikh Zayed road.

Elsewhere in the emirates, Netherlands-based contractor Bam won an estimated $1bn deal to build a 25,000-seat football stadium and sports centre, together with a major real estate component, comprising a hotel, a commercial centre and residential buildings, in Al-Ain.

While some large-scale real estate projects are moving ahead, they remain the exception rather than the rule.

If property prices start to rise, then investors may be encouraged to start work on new schemes in the future.